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Consumer Reports: How to find the best mortgage before homebuying
The peak season for home sales is around the corner, but many prospective buyers are likely to make a serious mistake.
Nearly half of all homebuyers settle for the first mortgage they're offered, according to the Consumer Financial Protection Bureau.
But Consumer Reports has important advice on how to be a bit more savvy.
Going to open houses or checking advertisements are ways to get a sense of the real estate market in your area. But before you jump to buy, Consumer Reports says you need to do what Kristina Capretti and her husband did and spend time looking for the best mortgage.
We wanted to make sure that we had a great rate in place, locked in place for the 30 years, for the term that we'd have the mortgage," she said.
Consumer Reports' Amanda Walker weighed in on the issue.
"Buying a house is a major purchase," she said. "Just a small difference in the mortgage
interest rate can make a big difference in your monthly payments. And that really adds up over the years."
For instance, with a 30-year mortgage at $155,000, if you get a fixed interest rate of 3.75 percent, you'll pay $718 per month.
If the interest rate is just a half-point higher, at 4.25 percent, the monthly payment jumps to $763, which is an increase of $16,000 over the life of the loan.
Consumer Reports says you need to educate yourself not only on interest rates, but also on the types of loans available, closing costs and other possible fees.
A good place to start is on the Consumer Financial Protection Bureau's website, at ConsumerFinance.gov.
"The next step, get quotes from several lenders," Walker said. "They can be large banks or mortgage companies. Remember to consider credit unions and small community banks, too."
Another place to look is Bankrate.com, a useful website if you want to broaden your search nationally.
Once you've bought a home, the work you put in getting the best mortgage will pay off for years to come.